S&P downgrades credit ratings for three French banks

Standard & Poor's (S&P) Ratings Services has downgraded the credit ratings for three French banks, including BNP Paribas, citing growing risks facing the banks from potential prolongation of the eurozone recession.
"In our view, the economic risks, under which French banks operate, are increasing, leaving French banks moderately more exposed to the potential of a more protracted recession in the eurozone," the S&P said in a statement, AFP reported on Thursday.
BNP's long-term rating was lowered to A+ from AA-. The other two lenders to have been downgraded were Banque Solfea and Cofidis, a consumer-credit arm of cooperative bank Credit Mutuel, whose rating was slashed to BBB+ from A-.
The outlook for these three lenders is negative.
The S&P also cut ratings for Solfea, a subsidiary of utility GDF Suez , to A- from A.
The ratings agency said the downgrades "reflects our view that these groups are more vulnerable to the impact of rising economic risks in the eurozone, particularly in France and countries in southern Europe due to their geographic concentrations in these markets."
The S&P also placed 10 other French banks, including Credit Agricole and Societe Generale, on negative outlook from stable, warning that they might be subjected to downgrades in the future.
Earlier in the month, the Bank of France announced that Europe's second-largest economy contracted in the third quarter of 2012 as the eurozone continues to grapple with economic woes.
The bank’s survey indicated that France's gross domestic product (GDP) shrunk by 0.1 percent during the period.
Europe plunged into financial crisis in early 2008. Insolvency now threatens heavily-debt-ridden countries such as Greece, Spain, Portugal, Italy, and Ireland.
The worsening debt crisis has forced the EU governments to adopt harsh austerity measures and tough economic reforms which have triggered incidents of social unrest and massive protests in many European countries.
MN/HN